Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT
Kristine D. Brenner
Director of Investor Relations
(810) 257-2506
kristine.brenner@citizensbanking.com
Director of Investor Relations
(810) 257-2506
kristine.brenner@citizensbanking.com
Citizens Republic Bancorp Announces Return to Profitability
| • | Net income applicable to common shareholders was $18.5 million, or $0.46 per share for the second quarter, which includes a $10 million income tax benefit | ||
| • | Pre-tax pre-provision profit was $33 million driven by a strong net interest margin of 3.56%, which increased 21 basis points from the second quarter of last year | ||
| • | Credit trends remain positive |
| • | Total 30-89 day delinquencies were $57 million, remaining around 1% of total outstanding loans for the 2nd consecutive quarter | ||
| • | Nonperforming assets decreased for the 7th consecutive quarter to $152 million. New inflows to commercial nonperforming loans were below $25 million for the quarter | ||
| • | Provision for loan losses was $18 million, declining 80% from the first quarter |
FLINT, MICHIGAN, July 28, 2011 —Citizens Republic Bancorp, Inc. (Nasdaq: CRBCD) announced net income attributable to common shareholders of $18.5 million, or $0.46 per diluted share for the three months ended June 30, 2011. This compares to net losses of $74.3 million, or $1.89 per diluted share for last quarter and $44.7 million, or $1.14 per diluted share for the second quarter of last year. Results for the second quarter of last year included net income from discontinued operations of $5.2 million. For the first six months of this year, Citizens recorded a net loss from continuing operations of $44.5 million, compared with a net loss of $120.5 million for the same period of 2010. All prior year shares outstanding and per share calculations have been adjusted in this release to reflect the 1-for-10 reverse stock split that became effective July 1, 2011.
“We are very pleased to report net income for the quarter. Returning to profitability following 12 consecutive quarters of losses after the difficult work that we’ve done and the tireless dedication of our employees is a milestone for our company. These results are driven by our continued focus on pre-tax pre-provision profit and significantly improved credit trends resulting in a lower provision expense. At the same time, we maintained a strong loan loss reserve and improved our capital ratios,” commented Cathleen Nash, president and chief executive officer.
Balance Sheet
Total assets at June 30, 2011 were $9.5 billion, a decrease of $228.5 million or 2.3% from last quarter and a decrease of $1.3 billion or 12.4% from last year. Money market investments decreased $318.7 million or 64.3% from last quarter, as funds were used to purchase investment securities and pay off maturing wholesale funding. Total portfolio loans were $5.6 billion, a modest 1.3% decrease from last quarter and a $1.5 billion or 21.2% reduction from June 30 of last year. The decline from a year ago reflects the results of the recently completed accelerated problem asset resolution program. Investment securities increased $667.4 million or 30.6% from June 30 of last year, as we reinvested a portion of the loan portfolio paydowns and proceeds from loan sales.
Core deposits, which exclude all time deposits, totaled $5.0 billion at June 30, 2011, essentially unchanged from the end of last quarter, but an increase of $201.1 million or 4.2% over June 30 of last year. Our continued stable core deposit trends reflect our focus on generating and growing core deposit relationships. Time deposits decreased $226.0 million, or 8.5% from last quarter and $978.7 million or
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28.6% from June 30 of last year. Both changes resulted from a strategic reduction in high cost single service and brokered time deposits.
Other interest-bearing liabilities, which include federal funds purchased and securities sold under agreements to repurchase, other short-term borrowings, and long-term debt, totaled $925.0 million at June 30, 2011, a decrease of $22.4 million or 2.4% from last quarter and a decrease of $316.9 million or 25.5% from June 30 of last year, as the result of a reduction in wholesale funding.
Capital
Citizens continues to maintain a strong capital position, and its regulatory capital ratios are above “well-capitalized” standards, as evidenced by the following key capital ratios.
| Regulatory | Excess Capital | |||||||||||||||||||
| Minimum for | June 30, | March 31, | June 30, | over Minimum | ||||||||||||||||
| Capital Ratios | “Well-Capitalized” | 2011 | 2011 | 2010 | (in millions) | |||||||||||||||
| Leverage ratio | 5.00 | % | 7.83 | % | 7.39 | % | 8.72 | % | $ | 262.6 | ||||||||||
| Tier 1 capital ratio | 6.00 | 12.43 | 11.90 | 12.79 | 376.1 | |||||||||||||||
| Total capital ratio | 10.00 | 13.77 | 13.24 | 14.17 | 220.4 | |||||||||||||||
| Tier 1 common equity (non-GAAP) | 6.36 | 5.93 | 8.10 | |||||||||||||||||
| Tangible equity to tangible assets (non-GAAP) | 7.12 | 6.57 | 8.45 | |||||||||||||||||
| Tangible common equity to tangible assets (non-GAAP) | 4.05 | 3.59 | 5.83 | |||||||||||||||||
Net Interest Income and Margin
Net interest margin increased 3 basis points to 3.56% in the second quarter primarily due to lower levels of non-performing assets. Net interest margin increased 21 basis points over the second quarter of last year due to declining deposit costs, reductions in high-cost funding, and wholesale funding repricing to lower fixed rates in addition to the improving credit trends. These items were partially offset by the effect of replacing declining loan balances with lower-yielding investment securities and money market investments. Year to date increases in net interest margin reflect similar trends to the second quarter of last year.
Net interest income was $77.6 million for the second quarter, a decrease of $1.0 million from last quarter and $7.0 million from the second quarter of last year due to lower average earning assets, partially offset by the higher net interest margin. These variances are also reflected in the decrease in net interest income year to date.
Credit Quality
Citizens’ key credit trends remain positive.
| • | Total delinquencies were $56.7 million at the end of the quarter, an increase of $5.5 million over the end of last quarter and a decrease of $55.0 million from the second quarter of last year. The increase over prior quarter resulted from a seasonal increase in consumer delinquencies. The decrease from last year reflects our emphasis on proactively managing and resolving delinquent commercial and consumer loans. | ||
| • | Nonperforming assets declined to $152.1 million, representing a 19.1% decrease from the end of last quarter and a decrease of $320.5 million or 67.8% from June 30 of last year. This marks the 7th consecutive quarter of declines in nonperforming assets and reflects our asset quality improvement initiatives over that time frame. | ||
| • | Net charge-offs decreased significantly to $35.4 million compared to $160.6 million in last quarter, which reflected problem asset resolution initiative related charge-offs. Compared to the second quarter of last year, charge-offs are down 50.3% as a result of that initiative and improved credit trends. | ||
| • | The provision for loan losses was $17.6 million in the second quarter, compared with $88.7 million last quarter and $70.6 million in the second quarter of last year. The decreases were the result of our focused efforts to improve asset quality and stabilized portfolio credit metrics. |
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| • | The allowance for loan losses was $206.3 million or 166.8% of nonperforming portfolio loans, compared with $224.1 million or 165.6% at the end of last quarter and $321.8 million or 83.7% as of June 30 of last year. The decreases in the reserve balance reflect improvement in the risk profile of the portfolios and the continuing stability and steady improvement in portfolio and economic trends. The decline from last year was additionally due to lower loan balances as well as lower reserves identified for specific commercial loans. |
Noninterest Income and Expense
Noninterest income was $23.3 million for the second quarter, essentially unchanged from last quarter and an increase of $1.0 million or 4.7% over the second quarter of last year. Year to date, noninterest income totaled $46.5 million, an increase of $1.8 million or 4.0% over the same period a year ago. The increases were primarily driven by the net impact of the gains and losses from the loans held for sale and investment securities portfolios. Overall, fee income categories were stable.
Noninterest expense was $69.4 million for the second quarter, a decrease of $12.2 million or 15.0% from last quarter and a decrease of $7.6 million or 9.8% from the second quarter of last year. The decreases were primarily the result of lower valuation writedowns and losses on other real estate and lower credit workout costs. Year to date net declines were also driven by these lower credit workout costs.
The income tax benefit for the second quarter of 2011 was $10.3 million, compared with a provision of $0.1 million and $3.7 million for the first quarter of 2011 and the second quarter of 2010, respectively. The variances were primarily the result of changes in other comprehensive income that are included in the calculation of the 2011 tax provision and reduction in the alternative minimum tax.
Conference Call
Citizens’ senior management will review the quarter’s results in a conference call at10:00 a.m. ET on Friday, July 29, 2011.A live audio webcast is available on Citizens’ investor relations page at www.citizensbanking.com or by calling (800) 894-5910 (conference ID: Citizens Republic). To listen to the conference call, please connect approximately 10 minutes prior to the scheduled conference time.
A recording will be available approximately two hours after the completion of the conference call at www.citizensbanking.com, where it will be archived for 90 days.
Discontinued Operations
As a result of the sale of Citizens’ wholly-owned subsidiary, F&M Bank — Iowa, during the second quarter of 2010, the financial condition and operating results for this subsidiary have been segregated from the financial condition and operating results of Citizens’ continuing operations throughout this release and, as such, are presented as a discontinued operation. While all prior periods have been revised retrospectively to align with this treatment, these changes do not affect Citizens’ reported consolidated financial condition or net income for any of the prior periods.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this release includes non-GAAP financial measures such as tangible equity to tangible assets ratio, tangible common equity to tangible assets ratio, Tier 1 common equity ratio, pre-tax pre-provision profit, net interest margin, and the efficiency ratio. Citizens believes these non-GAAP financial measures provide additional information that is useful to investors in understanding the underlying performance of Citizens, its business, and performance trends and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. To mitigate these limitations, Citizens has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that Citizens’ performance is properly reflected to facilitate consistent period-to-period comparisons. Although Citizens believes the above non-GAAP financial measures disclosed in this release enhance investors’ understanding of its business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. See our related Form 8-K for further discussion regarding these non-GAAP financial measures.
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Corporate Profile
Citizens Republic Bancorp, Inc. is a diversified financial services company providing a wide range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens serves communities in Michigan, Ohio, Wisconsin, and Indiana with 220 offices and 249 ATMs. Citizens is the largest bank holding company headquartered in Michigan with roots dating back to 1871 and is the 55th largest bank holding company headquartered in the United States. More information about Citizens is available at www.citizensbanking.com.
Safe Harbor Statement
Discussions and statements in this release that are not statements of historical fact, including without limitation, statements that include terms such as “will,” “may,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” and “plan,” and statements regarding Citizens’ future financial and operating results, plans, objectives, expectations and intentions, are forward-looking statements that involve risks and uncertainties, many of which are beyond Citizens’ control or are subject to change. No forward-looking statement is a guarantee of future performance and actual results could differ materially.
Factors that could cause or contribute to actual results differing materially from Citizens’ expectations include the risks and uncertainties detailed from time to time in Citizens’ annual and quarterly filings with the SEC, which are available at the SEC’s web site www.sec.gov. Other factors not currently anticipated may also materially and adversely affect Citizens’ results of operations, cash flows, financial position and prospects. There can be no assurance that future results will meet expectations. While Citizens believes that the forward-looking statements in this release are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. Citizens does not undertake, and expressly disclaims, any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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Consolidated Balance Sheets (Unaudited)
Citizens Republic Bancorp, Inc.
Citizens Republic Bancorp, Inc.
| June 30, | March 31, | June 30, | ||||||||||
| (in thousands) | 2011 | 2011 | 2010 | |||||||||
Assets | ||||||||||||
| Cash and due from banks | $ | 145,126 | $ | 136,638 | $ | 148,084 | ||||||
| Money market investments | 176,847 | 495,562 | 621,071 | |||||||||
| Investment Securities: | ||||||||||||
| Securities available for sale, at fair value | 1,368,530 | 2,119,416 | 2,071,208 | |||||||||
| Securities held to maturity, at amortized cost (fair value of $1,489,461, $541,646 and $115,832, respectively) | 1,482,787 | 547,449 | 112,734 | |||||||||
| Total investment securities | 2,851,317 | 2,666,865 | 2,183,942 | |||||||||
| FHLB and Federal Reserve stock | 125,635 | 143,873 | 157,304 | |||||||||
| Portfolio loans: | ||||||||||||
| Commercial and industrial | 1,349,803 | 1,353,167 | 1,686,769 | |||||||||
| Commercial real estate | 1,722,242 | 1,794,284 | 2,646,241 | |||||||||
| Total commercial | 3,072,045 | 3,147,451 | 4,333,010 | |||||||||
| Residential mortgage | 708,164 | 727,304 | 858,920 | |||||||||
| Direct consumer | 978,319 | 1,006,424 | 1,132,147 | |||||||||
| Indirect consumer | 869,109 | 823,019 | 814,038 | |||||||||
| Total portfolio loans | 5,627,637 | 5,704,198 | 7,138,115 | |||||||||
| Less: Allowance for loan losses | (206,292 | ) | (224,117 | ) | (321,841 | ) | ||||||
| Net portfolio loans | 5,421,345 | 5,480,081 | 6,816,274 | |||||||||
| Loans held for sale | 19,515 | 38,121 | 57,245 | |||||||||
| Premises and equipment | 100,596 | 102,162 | 107,405 | |||||||||
| Goodwill | 318,150 | 318,150 | 318,150 | |||||||||
| Other intangible assets | 8,848 | 9,626 | 12,214 | |||||||||
| Bank owned life insurance | 218,854 | 218,016 | 217,113 | |||||||||
| Other assets | 109,397 | 115,019 | 195,073 | |||||||||
Total assets | $ | 9,495,630 | $ | 9,724,113 | $ | 10,833,875 | ||||||
Liabilities | ||||||||||||
| Noninterest-bearing deposits | $ | 1,486,970 | $ | 1,413,920 | $ | 1,269,905 | ||||||
| Interest-bearing demand deposits | 917,522 | 956,676 | 998,676 | |||||||||
| Savings deposits | 2,592,176 | 2,646,851 | 2,526,972 | |||||||||
| Time deposits | 2,448,035 | 2,674,058 | 3,426,769 | |||||||||
| Total deposits | 7,444,703 | 7,691,505 | 8,222,322 | |||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 43,244 | 40,069 | 30,082 | |||||||||
| Other short-term borrowings | 680 | 690 | 700 | |||||||||
| Other liabilities | 146,169 | 139,819 | 151,880 | |||||||||
| Long-term debt | 881,112 | 906,629 | 1,211,147 | |||||||||
| Total liabilities | 8,515,908 | 8,778,712 | 9,616,131 | |||||||||
Shareholders’ Equity | ||||||||||||
| Preferred stock — no par value | 281,642 | 279,955 | 275,084 | |||||||||
| Common stock — no par value | 1,433,094 | 1,432,271 | 1,430,877 | |||||||||
| Retained deficit | (734,091 | ) | (752,547 | ) | (498,621 | ) | ||||||
| Accumulated other comprehensive (loss) income | (923 | ) | (14,278 | ) | 10,404 | |||||||
| Total shareholders’ equity | 979,722 | 945,401 | 1,217,744 | |||||||||
Total liabilities and shareholders’ equity | $ | 9,495,630 | $ | 9,724,113 | $ | 10,833,875 | ||||||
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Consolidated Statements of Operations (Unaudited)
Citizens Republic Bancorp, Inc.
Citizens Republic Bancorp, Inc.
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands, except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Interest Income | ||||||||||||||||
| Interest and fees on loans | $ | 77,677 | $ | 100,980 | $ | 158,388 | $ | 202,722 | ||||||||
| Interest and dividends on investment securities: | ||||||||||||||||
| Taxable | 20,546 | 18,600 | 40,156 | 36,861 | ||||||||||||
| Tax-exempt | 2,713 | 3,932 | 5,799 | 9,217 | ||||||||||||
| Dividends on FHLB and Federal Reserve stock | 1,044 | 1,026 | 2,169 | 2,028 | ||||||||||||
| Money market investments | 249 | 407 | 502 | 831 | ||||||||||||
| Total interest income | 102,229 | 124,945 | 207,014 | 251,659 | ||||||||||||
Interest Expense | ||||||||||||||||
| Deposits | 15,042 | 25,910 | 31,417 | 55,421 | ||||||||||||
| Short-term borrowings | 19 | 17 | 37 | 41 | ||||||||||||
| Long-term debt | 9,562 | 14,432 | 19,340 | 30,422 | ||||||||||||
| Total interest expense | 24,623 | 40,359 | 50,794 | 85,884 | ||||||||||||
Net Interest Income | 77,606 | 84,586 | 156,220 | 165,775 | ||||||||||||
| Provision for loan losses | 17,596 | 70,614 | 106,320 | 171,969 | ||||||||||||
| Net interest income (loss) after provision for loan losses | 60,010 | 13,972 | 49,900 | (6,194 | ) | |||||||||||
Noninterest Income | ||||||||||||||||
| Service charges on deposit accounts | 9,753 | 9,971 | 19,182 | 19,655 | ||||||||||||
| Trust fees | 3,811 | 3,836 | 7,734 | 7,631 | ||||||||||||
| Mortgage and other loan income | 1,883 | 2,198 | 4,825 | 4,787 | ||||||||||||
| Brokerage and investment fees | 1,533 | 1,322 | 2,641 | 2,255 | ||||||||||||
| ATM network user fees | 1,926 | 1,771 | 3,681 | 3,368 | ||||||||||||
| Bankcard fees | 2,468 | 2,266 | 4,706 | 4,273 | ||||||||||||
| Net gains (losses) on loans held for sale | 1,179 | (8,405 | ) | 73 | (16,107 | ) | ||||||||||
| Investment securities (losses) gains | (993 | ) | 8,051 | (1,376 | ) | 14,067 | ||||||||||
| Other income | 1,765 | 1,272 | 5,002 | 4,746 | ||||||||||||
| Total noninterest income | 23,325 | 22,282 | 46,468 | 44,675 | ||||||||||||
Noninterest Expense | ||||||||||||||||
| Salaries and employee benefits | 31,265 | 31,403 | 62,283 | 61,350 | ||||||||||||
| Occupancy | 6,047 | 6,139 | 13,609 | 13,600 | ||||||||||||
| Professional services | 2,407 | 2,615 | 4,626 | 4,868 | ||||||||||||
| Equipment | 2,841 | 2,979 | 5,893 | 6,051 | ||||||||||||
| Data processing services | 4,247 | 4,767 | 8,599 | 9,396 | ||||||||||||
| Advertising and public relations | 1,802 | 2,116 | 2,371 | 3,413 | ||||||||||||
| Postage and delivery | 1,120 | 1,295 | 2,236 | 2,309 | ||||||||||||
| Other loan expenses | 3,314 | 4,551 | 8,569 | 10,525 | ||||||||||||
| Losses on other real estate (ORE) | 1,355 | 3,778 | 10,477 | 10,541 | ||||||||||||
| ORE expenses | 1,029 | 800 | 2,797 | 1,990 | ||||||||||||
| Intangible asset amortization | 778 | 1,034 | 1,606 | 2,164 | ||||||||||||
| Other expense | 13,239 | 15,533 | 28,034 | 28,906 | ||||||||||||
| Total noninterest expense | 69,444 | 77,010 | 151,100 | 155,113 | ||||||||||||
Income (Loss) from Continuing Operations Before Income Taxes | 13,891 | (40,756 | ) | (54,732 | ) | (116,632 | ) | |||||||||
| Income tax (benefit) provision from continuing operations | (10,266 | ) | 3,700 | (10,211 | ) | 3,847 | ||||||||||
Income (Loss) from Continuing Operations | 24,157 | (44,456 | ) | (44,521 | ) | (120,479 | ) | |||||||||
Discontinued operations: | ||||||||||||||||
| Income (loss) from discontinued operations (net of income tax) | — | 5,151 | — | (3,822 | ) | |||||||||||
Net Income (Loss) | 24,157 | (39,305 | ) | (44,521 | ) | (124,301 | ) | |||||||||
| Dividend on redeemable preferred stock | (5,701 | ) | (5,406 | ) | (11,328 | ) | (10,688 | ) | ||||||||
Net Income (Loss) Attributable to Common Shareholders | $ | 18,456 | $ | (44,711 | ) | $ | (55,849 | ) | $ | (134,989 | ) | |||||
Income (Loss) Per Share from Continuing Operations | ||||||||||||||||
| Basic | $ | 0.46 | $ | (1.27 | ) | $ | (1.42 | ) | $ | (3.33 | ) | |||||
| Diluted | 0.46 | (1.27 | ) | (1.42 | ) | (3.33 | ) | |||||||||
Income (Loss) Per Share from Discontinued Operations | ||||||||||||||||
| Basic | $ | — | $ | 0.13 | $ | — | $ | (0.10 | ) | |||||||
| Diluted | — | 0.13 | — | (0.10 | ) | |||||||||||
Net Income (Loss) Per Common Share: | ||||||||||||||||
| Basic | $ | 0.46 | $ | (1.14 | ) | $ | (1.42 | ) | $ | (3.43 | ) | |||||
| Diluted | 0.46 | (1.14 | ) | (1.42 | ) | (3.43 | ) | |||||||||
Average Common Shares Outstanding: | ||||||||||||||||
| Basic | 39,417 | 39,384 | 39,412 | 39,381 | ||||||||||||
| Diluted | 39,417 | 39,384 | 39,412 | 39,381 | ||||||||||||
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Selected Quarterly Information (Unaudited)
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2011 | 2011 | 2010 | 2010 | 2010 | ||||||||||||||||
Summary of Operations (in thousands) | ||||||||||||||||||||
| Net interest income | $ | 77,606 | $ | 78,614 | $ | 81,731 | $ | 81,558 | $ | 84,586 | ||||||||||
| Provision for loan losses | 17,596 | 88,724 | 131,296 | 89,617 | 70,614 | |||||||||||||||
Noninterest income(1) | 23,325 | 23,143 | 24,028 | 25,956 | 22,282 | |||||||||||||||
| Noninterest expense | 69,444 | 81,656 | 77,234 | 74,740 | 77,010 | |||||||||||||||
| Income tax (benefit) provision from continuing operations | (10,266 | ) | 55 | 3,383 | 5,628 | 3,700 | ||||||||||||||
| Income (loss) from continuing operations | 24,157 | (68,678 | ) | (106,154 | ) | (62,471 | ) | (44,456 | ) | |||||||||||
| Income from discontinued operations (net of tax) | — | — | — | — | 5,151 | |||||||||||||||
| Net income (loss) | 24,157 | (68,678 | ) | (106,154 | ) | (62,471 | ) | (39,305 | ) | |||||||||||
Net income (loss) attributable to common shareholders(2) | 18,456 | (74,305 | ) | (111,699 | ) | (67,922 | ) | (44,711 | ) | |||||||||||
| Taxable equivalent adjustment, continuing operations | 1,884 | 2,102 | 2,247 | 2,372 | 2,605 | |||||||||||||||
Per Common Share Data(3) | ||||||||||||||||||||
| Income (loss) from continuing operations: | ||||||||||||||||||||
| Basic | $ | 0.46 | $ | (1.89 | ) | $ | (2.83 | ) | $ | (1.72 | ) | $ | (1.27 | ) | ||||||
| Diluted | 0.46 | (1.89 | ) | (2.83 | ) | (1.72 | ) | (1.27 | ) | |||||||||||
| Income per share from discontinued operations: | ||||||||||||||||||||
| Basic | $ | — | $ | — | $ | — | $ | — | $ | 0.13 | ||||||||||
| Diluted | — | — | — | — | 0.13 | |||||||||||||||
| Net income (loss): | ||||||||||||||||||||
| Basic | $ | 0.46 | $ | (1.89 | ) | $ | (2.83 | ) | $ | (1.72 | ) | $ | (1.14 | ) | ||||||
| Diluted | 0.46 | (1.89 | ) | (2.83 | ) | (1.72 | ) | (1.14 | ) | |||||||||||
| Common book value | 17.34 | 16.73 | 18.47 | 22.17 | 23.75 | |||||||||||||||
| Tangible book value (non-GAAP) | 16.22 | 15.53 | 17.20 | 20.84 | 22.35 | |||||||||||||||
| Tangible common book value (non-GAAP) | 9.22 | 8.49 | 10.19 | 13.87 | 15.42 | |||||||||||||||
Shares outstanding, end of period (000)(4) | 40,252 | 39,778 | 39,717 | 39,707 | 39,698 | |||||||||||||||
At Period End (millions) | ||||||||||||||||||||
| Assets | $ | 9,496 | $ | 9,724 | $ | 9,966 | $ | 10,639 | $ | 10,834 | ||||||||||
| Earning assets | 8,756 | 9,010 | 9,303 | 9,932 | 10,098 | |||||||||||||||
| Portfolio loans | 5,628 | 5,704 | 6,217 | 6,888 | 7,138 | |||||||||||||||
| Allowance for loan losses | 206 | 224 | 296 | 324 | 322 | |||||||||||||||
| Deposits | 7,445 | 7,692 | 7,727 | 8,101 | 8,222 | |||||||||||||||
| Long-term debt | 881 | 907 | 1,033 | 1,185 | 1,211 | |||||||||||||||
| Shareholders’ equity | 980 | 945 | 1,012 | 1,157 | 1,218 | |||||||||||||||
Average for the Quarter (millions) | ||||||||||||||||||||
| Assets | $ | 9,665 | $ | 9,899 | $ | 10,468 | $ | 10,803 | $ | 11,156 | ||||||||||
| Earning assets | 8,942 | 9,231 | 9,769 | 10,065 | 10,432 | |||||||||||||||
| Portfolio loans | 5,669 | 6,051 | 6,682 | 7,059 | 7,318 | |||||||||||||||
| Allowance for loan losses | 224 | 295 | 324 | 322 | 322 | |||||||||||||||
| Deposits | 7,606 | 7,730 | 7,965 | 8,198 | 8,431 | |||||||||||||||
| Long-term debt | 906 | 971 | 1,160 | 1,203 | 1,315 | |||||||||||||||
| Shareholders’ equity | 964 | 1,002 | 1,145 | 1,215 | 1,239 | |||||||||||||||
Financial Ratios (annualized)(5) | ||||||||||||||||||||
| Return on average assets | 1.00 | % | (2.81) | % | (4.02) | % | (2.29) | % | (1.60 | )% | ||||||||||
| Return on average shareholders’ equity | 10.05 | (27.79 | ) | (36.78 | ) | (20.40 | ) | (14.40 | ) | |||||||||||
| Average shareholders’ equity / average assets | 9.97 | 10.13 | 10.94 | 11.25 | 11.10 | |||||||||||||||
Net interest margin (FTE)(6) | 3.56 | 3.53 | 3.42 | 3.32 | 3.35 | |||||||||||||||
Efficiency ratio (non-GAAP)(7) | 66.90 | 78.33 | 71.39 | 68.02 | 75.93 | |||||||||||||||
| Allowance for loan losses as a percent of portfolio loans | 3.67 | 3.93 | 4.76 | 4.70 | 4.51 | |||||||||||||||
| Allowance for loan losses as a percent of nonperforming loans | 166.83 | 165.56 | 134.39 | 88.98 | 83.67 | |||||||||||||||
| Allowance for loan losses as a percent of nonperforming assets | 135.65 | 119.18 | 103.30 | 73.10 | 68.11 | |||||||||||||||
| Nonperforming loans as a percent of portfolio loans | 2.20 | 2.37 | 3.54 | 5.29 | 5.39 | |||||||||||||||
Nonperforming assets as a percent of portfolio loans plus ORAA(8) | 2.68 | 3.26 | 4.55 | 6.35 | 6.53 | |||||||||||||||
| Nonperforming assets as a percent of total assets | 1.60 | 1.93 | 2.88 | 4.17 | 4.36 | |||||||||||||||
| Net loans charged off as a percent of average portfolio loans (annualized) | 2.51 | 10.77 | 9.46 | 4.91 | 3.90 | |||||||||||||||
| Leverage ratio | 7.83 | 7.39 | 7.71 | 8.50 | 8.72 | |||||||||||||||
| Tier 1 capital ratio | 12.43 | 11.90 | 12.11 | 12.41 | 12.79 | |||||||||||||||
| Total capital ratio | 13.77 | 13.24 | 13.51 | 13.80 | 14.17 | |||||||||||||||
| (1) | Noninterest income includes a loss on investment securities of $1.0 million in the second quarter of 2011 and a gain of $8.0 million in the second quarter of 2010. | |
| (2) | Net income (loss) attributable to common shareholders includes a non-cash dividend to preferred shareholders of $5.7 million and $5.6 million in the second and first quarters of 2011 and $5.5 million, $5.4 million and $5.4 million in the fourth, third, and second quarters of 2010. | |
| (3) | Per Common Share Data numbers have been adjusted to reflect the 1 for 10 reverse stock split effective 7/1/11. | |
| (4) | Includes participating shares, which are restricted stock units and restricted shares. | |
| (5) | Financial ratios are based on continuing operations. | |
| (6) | Net interest margin is presented on an annual basis, includes taxable equivalent adjustments to interest income and is based on a tax rate of 35%. | |
| (7) | The Efficiency Ratio measures how efficiently a bank spends its revenues. The formula is: (Noninterest expense — Goodwill impairment)/(Net interest income + taxable equivalent adjustment + Total noninterest income — Investment securities (losses) gains). | |
| (8) | Other real estate assets acquired (“ORAA”) include loans held for sale. |
7
| Loan Portfolios | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| (in millions) | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||||||||
| Land hold | $ | 7.4 | $ | 17.3 | $ | 28.3 | $ | 37.1 | $ | 37.8 | ||||||||||
| Land development | 22.5 | 22.7 | 34.8 | 73.8 | 84.3 | |||||||||||||||
| Construction | 8.1 | 23.3 | 103.7 | 155.4 | 156.3 | |||||||||||||||
| Income producing | 1,019.6 | 1,038.7 | 1,171.0 | 1,382.3 | 1,481.7 | |||||||||||||||
| Owner-occupied | 664.6 | 692.3 | 783.0 | 855.1 | 886.1 | |||||||||||||||
| Total commercial real estate | 1,722.2 | 1,794.3 | 2,120.8 | 2,503.7 | 2,646.2 | |||||||||||||||
| Commercial and industrial | 1,349.8 | 1,353.2 | 1,474.2 | 1,657.4 | 1,686.8 | |||||||||||||||
| Total commercial | 3,072.0 | 3,147.5 | 3,595.0 | 4,161.1 | 4,333.0 | |||||||||||||||
| Residential mortgage | 708.2 | 727.3 | 756.2 | 800.5 | 858.9 | |||||||||||||||
| Direct consumer | 978.3 | 1,006.4 | 1,045.5 | 1,091.7 | 1,132.2 | |||||||||||||||
| Indirect consumer | 869.1 | 823.0 | 819.9 | 834.7 | 814.0 | |||||||||||||||
| Total consumer | 2,555.6 | 2,556.7 | 2,621.6 | 2,726.9 | 2,805.1 | |||||||||||||||
Total portfolio loans | $ | 5,627.6 | $ | 5,704.2 | $ | 6,216.6 | $ | 6,888.0 | $ | 7,138.1 | ||||||||||
| Delinquency Rates By Loan Portfolio | June 30, 2011 | March 31, 2011 | December 31,2010 | September 30, 2010 | June 30, 2010 | |||||||||||||||||||||||||||||||||||
| 30 to 89 days past due | % of | % of | % of | % of | % of | |||||||||||||||||||||||||||||||||||
| (in millions) | $ | Portfolio | $ | Portfolio | $ | Portfolio | $ | Portfolio | $ | Portfolio | ||||||||||||||||||||||||||||||
| Land hold | $ | 0.6 | 7.69 | % | $ | 0.5 | 2.95 | % | $ | 2.2 | 7.90 | % | $ | — | — | % | $ | 1.3 | 3.34 | % | ||||||||||||||||||||
| Land development | — | — | — | — | 0.2 | 0.62 | 4.5 | 6.04 | 2.0 | 2.43 | ||||||||||||||||||||||||||||||
| Construction | 1.7 | 21.2 | — | — | 0.5 | 0.45 | 2.4 | 1.53 | 6.4 | 4.07 | ||||||||||||||||||||||||||||||
| Income producing | 1.6 | 0.16 | 4.8 | 0.46 | 20.7 | 1.76 | 35.2 | 2.55 | 22.9 | 1.55 | ||||||||||||||||||||||||||||||
| Owner-occupied | 6.5 | 0.98 | 2.0 | 0.29 | 14.7 | 1.88 | 18.3 | 2.14 | 16.4 | 1.85 | ||||||||||||||||||||||||||||||
| Total commercial real estate | 10.4 | 0.60 | 7.3 | 0.41 | 38.3 | 1.80 | 60.4 | 2.41 | 49.0 | 1.85 | ||||||||||||||||||||||||||||||
| Commercial and industrial | 3.7 | 0.27 | 6.2 | 0.46 | 9.0 | 0.61 | 23.8 | 1.43 | 10.3 | 0.61 | ||||||||||||||||||||||||||||||
| Total commercial | 14.1 | 0.46 | 13.5 | 0.43 | 47.3 | 1.32 | 84.2 | 2.02 | 59.3 | 1.37 | ||||||||||||||||||||||||||||||
| Residential mortgage | 11.5 | 1.63 | 10.3 | 1.41 | 15.4 | 2.03 | 14.6 | 1.82 | 20.8 | 2.42 | ||||||||||||||||||||||||||||||
| Direct consumer | 20.4 | 2.08 | 17.2 | 1.71 | 22.4 | 2.14 | 20.5 | 1.88 | 20.2 | 1.79 | ||||||||||||||||||||||||||||||
| Indirect consumer | 10.7 | 1.23 | 10.2 | 1.24 | 13.3 | 1.62 | 12.2 | 1.46 | 11.4 | 1.40 | ||||||||||||||||||||||||||||||
| Total consumer | 42.6 | 1.67 | 37.7 | 1.47 | 51.1 | 1.95 | 47.3 | 1.73 | 52.4 | 1.87 | ||||||||||||||||||||||||||||||
Total delinquent loans | $ | 56.7 | 1.01 | $ | 51.2 | 0.90 | $ | 98.4 | 1.58 | $ | 131.5 | 1.91 | $ | 111.7 | 1.57 | |||||||||||||||||||||||||
8
| Nonperforming Assets | June 30,2011 | March 31, 2011 | December 31, 2010 | September 30, 2010 | June 30, 2010 | |||||||||||||||||||||||||||||||||||
| % of | % of | % of | % of | % of | ||||||||||||||||||||||||||||||||||||
| (in millions) | $ | Portfolio | $ | Portfolio | $ | Portfolio | $ | Portfolio | $ | Portfolio | ||||||||||||||||||||||||||||||
| Land hold | $ | 0.2 | 2.25 | % | $ | 1.2 | 6.68 | % | $ | 3.2 | 11.50 | % | $ | 5.6 | 15.13 | % | $ | 5.2 | 13.76 | % | ||||||||||||||||||||
| Land development | 0.4 | 1.68 | 0.1 | 0.35 | 3.1 | 8.82 | 16.0 | 21.64 | 22.3 | 26.48 | ||||||||||||||||||||||||||||||
| Construction | 0.5 | 6.89 | 0.4 | 1.70 | 7.5 | 7.21 | 27.4 | 17.65 | 25.0 | 15.99 | ||||||||||||||||||||||||||||||
| Income producing | 20.2 | 1.98 | 28.2 | 2.72 | 62.0 | 5.30 | 147.7 | 10.69 | 148.4 | 10.02 | ||||||||||||||||||||||||||||||
| Owner-occupied | 21.2 | 3.18 | 21.7 | 3.14 | 42.8 | 5.47 | 63.3 | 7.40 | 59.5 | 6.71 | ||||||||||||||||||||||||||||||
| Total commercial real estate | 42.5 | 2.47 | 51.6 | 2.88 | 118.6 | 5.59 | 260.0 | 10.39 | 260.4 | 9.84 | ||||||||||||||||||||||||||||||
| Commercial and industrial | 21.0 | 1.56 | 25.8 | 1.91 | 57.8 | 3.92 | 61.5 | 3.71 | 67.0 | 3.97 | ||||||||||||||||||||||||||||||
| Total nonaccruing commercial | 63.5 | 2.07 | 77.4 | 2.46 | 176.4 | 4.91 | 321.5 | 7.73 | 327.4 | 7.56 | ||||||||||||||||||||||||||||||
| Residential mortgage | 30.7 | 4.33 | 30.4 | 4.18 | 22.1 | 2.92 | 16.9 | 2.11 | 31.0 | 3.61 | ||||||||||||||||||||||||||||||
| Direct consumer | 13.9 | 1.43 | 13.0 | 1.30 | 12.5 | 1.20 | 15.5 | 1.42 | 18.7 | 1.65 | ||||||||||||||||||||||||||||||
| Indirect consumer | 1.3 | 0.15 | 1.2 | 0.14 | 1.3 | 0.16 | 1.7 | 0.20 | 1.5 | 0.18 | ||||||||||||||||||||||||||||||
| Total nonaccruing consumer | 45.9 | 1.80 | 44.6 | 1.74 | 35.9 | 1.37 | 34.1 | 1.25 | 51.2 | 1.82 | ||||||||||||||||||||||||||||||
| Total nonaccruing loans | 109.4 | 1.94 | 122.0 | 2.14 | 212.3 | 3.42 | 355.6 | 5.16 | 378.6 | 5.30 | ||||||||||||||||||||||||||||||
| Loans 90+ days still accruing | 1.6 | 0.03 | 0.7 | 0.01 | 1.6 | 0.03 | 1.6 | 0.02 | 1.5 | 0.02 | ||||||||||||||||||||||||||||||
| Restructured loans still accruing | 12.7 | 0.23 | 12.7 | 0.22 | 6.4 | 0.10 | 7.0 | 0.10 | 4.6 | 0.06 | ||||||||||||||||||||||||||||||
| Total nonperforming portfolio loans | 123.7 | 2.20 | 135.4 | 2.37 | 220.3 | 3.54 | 364.2 | 5.29 | 384.7 | 5.39 | ||||||||||||||||||||||||||||||
| Nonperforming held for sale | 11.4 | 30.4 | 24.1 | 38.4 | 44.0 | |||||||||||||||||||||||||||||||||||
| Other repossessed assets acquired | 17.0 | 22.2 | 42.2 | 40.7 | 43.9 | |||||||||||||||||||||||||||||||||||
Total nonperforming assets | $ | 152.1 | $ | 188.0 | $ | 286.6 | $ | 443.3 | $ | 472.6 | ||||||||||||||||||||||||||||||
| Commercial inflows | $ | 24.3 | $ | 29.5 | $ | 110.9 | $ | 95.6 | $ | 75.9 | ||||||||||||||||||||||||||||||
| Commercial outflows | (38.3 | ) | (128.5 | ) | (256.0 | ) | (101.5 | ) | (118.6 | ) | ||||||||||||||||||||||||||||||
| Net change | $ | (14.0 | ) | $ | (99.0 | ) | $ | (145.1 | ) | $ | (5.9 | ) | $ | (42.7 | ) | |||||||||||||||||||||||||
| Net Charge-Offs | Three Months Ended | |||||||||||||||||||||||||||||||||||||||
| June 30, 2011 | March 31, 2011 | December 31, 2010 | September 30, 2010 | June 30, 2010 | ||||||||||||||||||||||||||||||||||||
| % of | % of | % of | % of | % of | ||||||||||||||||||||||||||||||||||||
| (in millions) | $ | Portfolio* | $ | Portfolio* | $ | Portfolio* | $ | Portfolio* | $ | Portfolio* | ||||||||||||||||||||||||||||||
| Land hold | $ | 4.7 | N/M | % | $ | 4.9 | N/M | % | $ | 5.2 | 73.54 | % | $ | 0.3 | 3.30 | % | $ | 0.4 | 3.72 | % | ||||||||||||||||||||
| Land development | — | — | 4.4 | 79.15 | 19.7 | N/M | 9.0 | 48.29 | 9.8 | 46.68 | ||||||||||||||||||||||||||||||
| Construction | — | — | 5.6 | 97.09 | 10.0 | 38.44 | 0.4 | 1.10 | 8.7 | 22.23 | ||||||||||||||||||||||||||||||
| Income producing | 8.2 | 3.24 | 77.6 | 30.30 | 64.2 | 21.74 | 30.8 | 8.85 | 12.6 | 3.41 | ||||||||||||||||||||||||||||||
| Owner-occupied | 3.2 | 1.90 | 25.3 | 14.80 | 18.1 | 9.16 | 4.8 | 2.21 | 18.9 | 8.57 | ||||||||||||||||||||||||||||||
| Total commercial real estate | 16.1 | 3.76 | 117.8 | 26.63 | 117.2 | 21.92 | 45.3 | 7.18 | 50.4 | 7.63 | ||||||||||||||||||||||||||||||
| Commercial and industrial | 7.2 | 2.13 | 32.0 | 9.59 | 26.0 | 7.01 | 6.8 | 1.62 | 11.4 | 2.71 | ||||||||||||||||||||||||||||||
| Total commercial | 23.3 | 3.04 | 149.8 | 19.30 | 143.2 | 15.81 | 52.1 | 4.97 | 61.8 | 5.72 | ||||||||||||||||||||||||||||||
| Residential mortgage | 4.4 | 2.51 | 3.4 | 1.90 | 6.1 | 3.20 | 23.3 | 11.57 | 0.6 | 0.29 | ||||||||||||||||||||||||||||||
| Direct consumer | 5.6 | 2.30 | 5.5 | 2.21 | 7.1 | 2.70 | 9.8 | 3.56 | 5.5 | 1.96 | ||||||||||||||||||||||||||||||
| Indirect consumer | 2.1 | 0.96 | 1.9 | 0.95 | 2.9 | 1.39 | 2.2 | 1.05 | 3.3 | 1.61 | ||||||||||||||||||||||||||||||
| Total consumer | 12.1 | 1.90 | 10.8 | 1.72 | 16.1 | 2.43 | 35.3 | 5.14 | 9.4 | 1.35 | ||||||||||||||||||||||||||||||
Total net charge-offs | $ | 35.4 | 2.51 | $ | 160.6 | 10.77 | $ | 159.3 | 9.46 | $ | 87.4 | 4.91 | $ | 71.2 | 3.90 | |||||||||||||||||||||||||
| * | Represents an annualized rate. | |
| N/M — Not Meaningful | ||
9
Allocation of the Allowance for Loan Losses (ALLL)(1)
| June 30, 2011 | March 31, 2011 | June 30, 2010 | ||||||||||||||||||||||
| Related | Related | Related | ||||||||||||||||||||||
| (in millions) | ALLL | NPL(2) | ALLL | NPL(2) | ALLL | NPL(2) | ||||||||||||||||||
| Specific allocated allowance: | ||||||||||||||||||||||||
| Commercial and industrial | $ | 0.2 | $ | 13.4 | $ | 0.7 | $ | 17.0 | $ | 11.0 | $ | 47.6 | ||||||||||||
| Commercial real estate | 3.7 | 33.6 | 6.7 | 37.4 | 60.8 | 230.5 | ||||||||||||||||||
| Residential mortgage | 2.4 | 12.1 | 2.0 | 10.2 | 1.5 | 7.4 | ||||||||||||||||||
| Direct Consumer | 0.2 | 1.7 | 0.2 | 1.7 | — | — | ||||||||||||||||||
| Total specific allocated allowance | 6.5 | 60.8 | 9.6 | 66.3 | 73.3 | 285.5 | ||||||||||||||||||
| Risk allocated allowance: | ||||||||||||||||||||||||
| Commercial and industrial | 30.4 | 9.7 | 29.4 | 9.9 | 33.9 | 20.9 | ||||||||||||||||||
| Commercial real estate (CRE) | 76.9 | 17.4 | 84.7 | 22.7 | 111.7 | 29.9 | ||||||||||||||||||
| Total commercial | 107.3 | 27.1 | 114.1 | 32.6 | 145.6 | 50.8 | ||||||||||||||||||
| Residential mortgage | 41.5 | 20.0 | 49.9 | 21.6 | 23.4 | 26.4 | ||||||||||||||||||
| Direct Consumer | 32.5 | 14.5 | 31.8 | 13.7 | 36.2 | 20.0 | ||||||||||||||||||
| Indirect Consumer | 15.5 | 1.3 | 14.9 | 1.2 | 37.3 | 2.0 | ||||||||||||||||||
| Total risk allocated allowance | 196.8 | 62.9 | 210.7 | 69.1 | 242.5 | 99.2 | ||||||||||||||||||
| Total allocated allowance | 203.3 | 123.7 | 220.3 | 135.4 | 315.8 | 384.7 | ||||||||||||||||||
| General valuation allowances | 3.0 | — | 3.8 | — | 6.0 | — | ||||||||||||||||||
| Total allowance | $ | 206.3 | $ | 123.7 | $ | 224.1 | $ | 135.4 | $ | 321.8 | $ | 384.7 | ||||||||||||
| (1) | The allocation of the allowance for loan losses in the above table is based upon ranges of estimates and is not intended to imply either limitations on the usage of the allowance or precision of the specific amounts. Citizens does not view the allowance for loan losses as being divisible among the various categories of loans. The entire allowance is available to absorb any future losses without regard to the category or categories in which the charged-off loans are classified. | |
| (2) | Related NPL amounts in risk allocated allowances include restructured loans and still accruing and loans 90+ days past due and still accruing but classified as nonperforming. |
10
Summary of Loan Loss Experience
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||||||||
| Allowance for loan losses — beginning of period | $ | 224,117 | $ | 296,031 | $ | 324,046 | $ | 321,841 | $ | 322,377 | ||||||||||
| Provision for loan losses | 17,596 | 88,724 | 131,296 | 89,617 | 70,614 | |||||||||||||||
| Charge-offs: | ||||||||||||||||||||
| Commercial and industrial | 4,016 | 29,712 | 24,634 | 6,083 | 10,943 | |||||||||||||||
| Small business | 3,853 | 4,078 | 2,747 | 2,061 | 1,398 | |||||||||||||||
| Commercial real estate | 16,371 | 118,721 | 119,986 | 45,910 | 51,183 | |||||||||||||||
| Total commercial | 24,240 | 152,511 | 147,367 | 54,054 | 63,524 | |||||||||||||||
| Residential mortgage | 4,659 | 3,403 | 6,141 | 23,353 | 705 | |||||||||||||||
| Direct consumer | 6,522 | 6,468 | 7,701 | 10,256 | 5,907 | |||||||||||||||
| Indirect consumer | 2,639 | 2,472 | 3,647 | 2,808 | 4,028 | |||||||||||||||
| Total charge-offs | 38,060 | 164,854 | 164,856 | 90,471 | 74,164 | |||||||||||||||
| Recoveries: | ||||||||||||||||||||
| Commercial and industrial | 524 | 1,603 | 1,017 | 1,321 | 899 | |||||||||||||||
| Small business | 169 | 174 | 309 | 89 | 38 | |||||||||||||||
| Commercial real estate | 238 | 913 | 2,813 | 579 | 829 | |||||||||||||||
| Total commercial | 931 | 2,690 | 4,139 | 1,989 | 1,766 | |||||||||||||||
| Residential mortgage | 228 | 3 | 42 | 15 | 80 | |||||||||||||||
| Direct consumer | 917 | 972 | 587 | 452 | 386 | |||||||||||||||
| Indirect consumer | 563 | 551 | 777 | 603 | 782 | |||||||||||||||
| Total recoveries | 2,639 | 4,216 | 5,545 | 3,059 | 3,014 | |||||||||||||||
| Net charge-offs | 35,421 | 160,638 | 159,311 | 87,412 | 71,150 | |||||||||||||||
| Allowance for loan losses — end of period | $ | 206,292 | $ | 224,117 | $ | 296,031 | $ | 324,046 | $ | 321,841 | ||||||||||
11
Non-GAAP Reconciliation
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2011 | 2011 | 2010 | 2010 | 2010 | ||||||||||||||||
Efficiency Ratio (non-GAAP)(in thousands) | ||||||||||||||||||||
| Net interest income (A) | $ | 77,606 | $ | 78,614 | $ | 81,731 | $ | 81,558 | $ | 84,586 | ||||||||||
| Taxable equivalent adjustment (B) | 1,884 | 2,102 | 2,247 | 2,372 | 2,605 | |||||||||||||||
| Investment securities (losses) gain (C) | (993 | ) | (383 | ) | (171 | ) | — | 8,051 | ||||||||||||
| Noninterest income (D) | 23,325 | 23,143 | 24,028 | 25,956 | 22,282 | |||||||||||||||
| Noninterest expense (E) | 69,444 | 81,656 | 77,234 | 74,740 | 77,010 | |||||||||||||||
Efficiency ratio: E/(A+B-C+D) (non-GAAP) | 66.90 | % | 78.33 | % | 71.39 | % | 68.02 | % | 75.93 | % | ||||||||||
Tangible Common Equity to Tangible Assets(in millions) | ||||||||||||||||||||
| Total assets | $ | 9,496 | $ | 9,724 | $ | 9,966 | $ | 10,639 | $ | 10,834 | ||||||||||
| Goodwill | (318 | ) | (318 | ) | (318 | ) | (318 | ) | (318 | ) | ||||||||||
| Other intangible assets | (9 | ) | (10 | ) | (11 | ) | (11 | ) | (12 | ) | ||||||||||
| Tangible assets (non-GAAP) | $ | 9,169 | $ | 9,396 | $ | 9,637 | $ | 10,310 | $ | 10,504 | ||||||||||
| Total shareholders’ equity | $ | 980 | $ | 945 | $ | 1,012 | $ | 1,157 | $ | 1,218 | ||||||||||
| Goodwill | (318 | ) | (318 | ) | (318 | ) | (318 | ) | (318 | ) | ||||||||||
| Other intangible assets | (9 | ) | (10 | ) | (11 | ) | (11 | ) | (12 | ) | ||||||||||
| Tangible equity (non-GAAP) | $ | 653 | $ | 617 | $ | 683 | $ | 828 | $ | 888 | ||||||||||
| Tangible equity | $ | 653 | $ | 617 | $ | 683 | $ | 828 | $ | 888 | ||||||||||
| Preferred stock | (282 | ) | (280 | ) | (278 | ) | (277 | ) | (275 | ) | ||||||||||
| Tangible common equity (non-GAAP) | $ | 371 | $ | 337 | $ | 405 | $ | 551 | $ | 613 | ||||||||||
Tier 1 Common Equity (non-GAAP)(in millions) | ||||||||||||||||||||
| Total shareholders’ equity | $ | 980 | $ | 945 | $ | 1,012 | $ | 1,157 | $ | 1,218 | ||||||||||
| Qualifying capital securities | 74 | 74 | 74 | 74 | 74 | |||||||||||||||
| Goodwill | (318 | ) | (318 | ) | (318 | ) | (318 | ) | (318 | ) | ||||||||||
| Accumulated other comprehensive loss (income) | 1 | 14 | 20 | (16 | ) | (10 | ) | |||||||||||||
| Other intangible assets | (9 | ) | (10 | ) | (11 | ) | (11 | ) | (12 | ) | ||||||||||
| Tier 1 capital (regulatory) | $ | 728 | $ | 705 | $ | 777 | $ | 886 | $ | 952 | ||||||||||
| Tier 1 capital (regulatory) | $ | 728 | $ | 705 | $ | 777 | $ | 886 | $ | 952 | ||||||||||
| Qualifying capital securities | (74 | ) | (74 | ) | (74 | ) | (74 | ) | (74 | ) | ||||||||||
| Preferred stock | (282 | ) | (280 | ) | (278 | ) | (277 | ) | (275 | ) | ||||||||||
| Total Tier 1 common equity (non-GAAP) | $ | 372 | $ | 351 | $ | 425 | $ | 535 | $ | 603 | ||||||||||
Net risk-weighted assets (regulatory)(1) | $ | 5,850 | $ | 5,930 | $ | 6,417 | $ | 7,133 | $ | 7,432 | ||||||||||
Equity to assets | 10.32 | % | 9.72 | % | 10.15 | % | 10.88 | % | 11.24 | % | ||||||||||
Tier 1 common equity (non-GAAP) | 6.36 | 5.93 | 6.62 | 7.50 | 8.10 | |||||||||||||||
Tangible equity to tangible assets (non-GAAP) | 7.12 | 6.57 | 7.09 | 8.03 | 8.45 | |||||||||||||||
Tangible common equity to tangible assets (non-GAAP) | 4.05 | 3.59 | 4.20 | 5.34 | 5.83 | |||||||||||||||
| (1) | Net risk-weighted assets (regulatory) for second quarter 2010 were calculated on a combined basis. |
12
Pre-tax pre-provision profit (non-GAAP)
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||||||||
| Income (loss) from continuing operations | $ | 24,157 | $ | (68,678 | ) | $ | (106,154 | ) | $ | (62,471 | ) | $ | (44,456 | ) | ||||||
| Income tax (benefit) provision from continuing operations | (10,266 | ) | 55 | 3,383 | 5,628 | 3,700 | ||||||||||||||
| Provision for loan losses | 17,596 | 88,724 | 131,296 | 89,617 | 70,614 | |||||||||||||||
| Net (gains) losses on loans held for sale | (1,179 | ) | 1,106 | 3,069 | 1,441 | 8,405 | ||||||||||||||
| Investment securities losses (gains) | 993 | 383 | 171 | — | (8,051 | ) | ||||||||||||||
| Losses on other real estate (ORE) | 1,355 | 9,122 | 930 | 1,967 | 3,778 | |||||||||||||||
Fair-value adjustment on bank owned life insurance(1) | 48 | (100 | ) | (105 | ) | (159 | ) | 280 | ||||||||||||
Fair-value adjustment on swaps(1) | 77 | 114 | (535 | ) | 202 | 279 | ||||||||||||||
Pre-tax pre-provision profit (non-GAAP) | $ | 32,781 | $ | 30,726 | $ | 32,055 | $ | 36,225 | $ | 34,549 | ||||||||||
| (1) | Fair-value adjustment amounts contained in line item “Other income” on Consolidated Statements of Operations |
Noninterest Income and Noninterest Expense
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (in thousands) | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||||||||
| Service charges on deposit accounts | $ | 9,753 | $ | 9,429 | $ | 10,072 | $ | 10,609 | $ | 9,971 | ||||||||||
| Trust fees | 3,811 | 3,923 | 4,135 | 3,837 | 3,836 | |||||||||||||||
| Mortgage and other loan income | 1,883 | 2,942 | 3,109 | 2,590 | 2,198 | |||||||||||||||
| Brokerage and investment fees | 1,533 | 1,108 | 1,264 | 1,060 | 1,322 | |||||||||||||||
| ATM network user fees | 1,926 | 1,755 | 1,825 | 1,864 | 1,771 | |||||||||||||||
| Bankcard fees | 2,468 | 2,238 | 2,325 | 2,261 | 2,266 | |||||||||||||||
| Net gains (losses) on loans held for sale | 1,179 | (1,106 | ) | (3,069 | ) | (1,441 | ) | (8,405 | ) | |||||||||||
| Investment securities (losses) gains | (993 | ) | (383 | ) | (171 | ) | — | 8,051 | ||||||||||||
| Other income | 1,765 | 3,237 | 4,538 | 5,176 | 1,272 | |||||||||||||||
Total noninterest income | $ | 23,325 | $ | 23,143 | $ | 24,028 | $ | 25,956 | $ | 22,282 | ||||||||||
| Salaries and employee benefits | $ | 31,265 | $ | 31,018 | $ | 32,294 | $ | 32,740 | $ | 31,403 | ||||||||||
| Occupancy | 6,047 | 7,562 | 6,834 | 6,529 | 6,139 | |||||||||||||||
| Professional services | 2,407 | 2,219 | 2,945 | 2,737 | 2,615 | |||||||||||||||
| Equipment | 2,841 | 3,052 | 3,355 | 3,076 | 2,979 | |||||||||||||||
| Data processing services | 4,247 | 4,352 | 4,636 | 4,702 | 4,767 | |||||||||||||||
| Advertising and public relations | 1,802 | 569 | 1,512 | 1,605 | 2,116 | |||||||||||||||
| Postage and delivery | 1,120 | 1,116 | 1,075 | 1,187 | 1,295 | |||||||||||||||
| Other loan expenses | 3,314 | 5,255 | 5,431 | 4,355 | 4,551 | |||||||||||||||
| Losses on other real estate (ORE) | 1,355 | 9,122 | 930 | 1,967 | 3,778 | |||||||||||||||
| ORE expenses | 1,029 | 1,768 | 1,653 | 1,327 | 800 | |||||||||||||||
| Intangible asset amortization | 778 | 828 | 851 | 908 | 1,034 | |||||||||||||||
| Other expense | 13,239 | 14,795 | 15,718 | 13,607 | 15,533 | |||||||||||||||
Total noninterest expense | $ | 69,444 | $ | 81,656 | $ | 77,234 | $ | 74,740 | $ | 77,010 | ||||||||||
13
Average Balances, Yields and Rates
| Three Months Ended | ||||||||||||||||||||||||
| June 30, 2011 | March 31, 2011 | June 30, 2010 | ||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||||||||
| (in thousands) | Balance | Rate | Balance | Rate | Balance | Rate | ||||||||||||||||||
Earning Assets | ||||||||||||||||||||||||
| Money market investments | $ | 403,380 | 0.25 | % | $ | 416,756 | 0.25 | % | $ | 654,502 | 0.25 | % | ||||||||||||
| Investment securities: | ||||||||||||||||||||||||
| Taxable | 2,443,792 | 3.36 | 2,313,467 | 3.39 | 1,856,490 | 4.01 | ||||||||||||||||||
| Tax-exempt | 254,797 | 6.55 | 278,679 | 6.81 | 351,717 | 6.88 | ||||||||||||||||||
| FHLB and Federal Reserve stock | 137,433 | 3.04 | 143,873 | 3.16 | 156,597 | 2.62 | ||||||||||||||||||
| Portfolio loans: | ||||||||||||||||||||||||
| Commercial and industrial | 1,348,499 | 5.38 | 1,422,574 | 4.59 | 1,775,054 | 4.93 | ||||||||||||||||||
| Commercial real estate | 1,766,070 | 5.04 | 2,045,360 | 5.30 | 2,722,843 | 5.29 | ||||||||||||||||||
| Residential mortgage | 719,336 | 4.80 | 741,818 | 4.76 | 865,732 | 5.66 | ||||||||||||||||||
| Direct consumer | 990,764 | 6.06 | 1,024,979 | 6.12 | 1,153,278 | 6.09 | ||||||||||||||||||
| Indirect consumer | 844,083 | 6.68 | 816,676 | 6.79 | 801,556 | 6.81 | ||||||||||||||||||
| Total portfolio loans | 5,668,752 | 5.51 | 6,051,407 | 5.40 | 7,318,463 | 5.54 | ||||||||||||||||||
| Loans held for sale | 34,194 | 1.72 | 26,860 | 5.50 | 94,381 | 1.47 | ||||||||||||||||||
| Total earning assets | 8,942,348 | 4.67 | 9,231,042 | 4.67 | 10,432,150 | 4.90 | ||||||||||||||||||
Nonearning Assets | ||||||||||||||||||||||||
| Cash and due from banks | 138,728 | 143,957 | 143,924 | |||||||||||||||||||||
| Bank premises and equipment | 101,352 | 104,399 | 107,874 | |||||||||||||||||||||
| Investment security fair value adjustment | 53,822 | 32,229 | 45,580 | |||||||||||||||||||||
| Other nonearning assets | 652,611 | 682,526 | 748,626 | |||||||||||||||||||||
| Assets of discontinued operations | — | — | 110,881 | |||||||||||||||||||||
| Allowance for loan losses | (223,922 | ) | (295,232 | ) | (321,976 | ) | ||||||||||||||||||
| Total assets | $ | 9,664,939 | $ | 9,898,921 | $ | 11,267,059 | ||||||||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 947,220 | 0.23 | $ | 951,770 | 0.23 | $ | 1,044,580 | 0.28 | |||||||||||||||
| Savings deposits | 2,621,616 | 0.37 | 2,629,296 | 0.40 | 2,533,846 | 0.66 | ||||||||||||||||||
| Time deposits | 2,562,463 | 1.89 | 2,753,306 | 1.95 | 3,566,321 | 2.36 | ||||||||||||||||||
| Short-term borrowings | 41,340 | 0.18 | 41,187 | 0.18 | 31,897 | 0.21 | ||||||||||||||||||
| Long-term debt | 905,902 | 4.23 | 971,076 | 4.08 | 1,314,991 | 4.40 | ||||||||||||||||||
| Total interest-bearing liabilities | 7,078,541 | 1.40 | 7,346,635 | 1.44 | 8,491,635 | 1.91 | ||||||||||||||||||
Noninterest-Bearing Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
| Noninterest-bearing demand | 1,474,408 | 1,395,588 | 1,286,243 | |||||||||||||||||||||
| Other liabilities | 148,058 | 154,408 | 144,354 | |||||||||||||||||||||
| Liabilities of discontinued operations | — | — | 106,227 | |||||||||||||||||||||
| Shareholders’ equity | 963,932 | 1,002,290 | 1,238,600 | |||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 9,664,939 | $ | 9,898,921 | $ | 11,267,059 | ||||||||||||||||||
Interest Spread | 3.27 | 3.23 | 2.99 | |||||||||||||||||||||
| Contribution of noninterest bearing sources of funds | 0.29 | 0.30 | 0.36 | |||||||||||||||||||||
Net Interest Margin | 3.56 | % | 3.53 | % | 3.35 | % | ||||||||||||||||||
14
Average Balances, Yields and Rates
| Six Months Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Average | Average | Average | Average | |||||||||||||
| (in thousands) | Balance | Rate | Balance | Rate | ||||||||||||
Earning Assets | ||||||||||||||||
| Money market investments | $ | 410,031 | 0.25 | % | $ | 675,144 | 0.25 | % | ||||||||
| Investment securities: | ||||||||||||||||
| Taxable | 2,378,990 | 3.38 | 1,806,926 | 4.08 | ||||||||||||
| Tax-exempt | 266,672 | 6.69 | 421,953 | 6.72 | ||||||||||||
| FHLB and Federal Reserve stock | 140,635 | 3.10 | 155,845 | 2.62 | ||||||||||||
| Portfolio loans: | ||||||||||||||||
| Commercial and industrial | 1,385,331 | 4.98 | 1,824,723 | 4.90 | ||||||||||||
| Commercial real estate | 1,904,944 | 5.18 | 2,756,930 | 5.27 | ||||||||||||
| Residential mortgage | 730,515 | 4.78 | 926,955 | 5.19 | ||||||||||||
| Direct consumer | 1,007,777 | 6.09 | 1,177,404 | 6.07 | ||||||||||||
| Indirect consumer | 830,455 | 6.74 | 799,530 | 6.84 | ||||||||||||
| Total portfolio loans | 5,859,022 | 5.46 | 7,485,542 | 5.46 | ||||||||||||
| Loans held for sale | 30,547 | 3.38 | 89,205 | 1.67 | ||||||||||||
| Total earning assets | 9,085,897 | 4.67 | 10,634,615 | 4.87 | ||||||||||||
Nonearning Assets | ||||||||||||||||
| Cash and due from banks | 141,328 | 176,345 | ||||||||||||||
| Bank premises and equipment | 102,868 | 108,780 | ||||||||||||||
| Investment security fair value adjustment | 43,085 | 44,029 | ||||||||||||||
| Other nonearning assets | 667,486 | 729,498 | ||||||||||||||
| Assets of discontinued operations | — | 219,029 | ||||||||||||||
| Allowance for loan losses | (259,380 | ) | (328,934 | ) | ||||||||||||
| Total assets | $ | 9,781,284 | $ | 11,583,362 | ||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Interest-bearing demand deposits | $ | 949,482 | 0.23 | $ | 1,060,175 | 0.29 | ||||||||||
| Savings deposits | 2,625,435 | 0.39 | 2,512,123 | 0.67 | ||||||||||||
| Time deposits | 2,657,357 | 1.92 | 3,637,529 | 2.52 | ||||||||||||
| Short-term borrowings | 41,264 | 0.18 | 34,207 | 0.24 | ||||||||||||
| Long-term debt | 938,309 | 4.15 | 1,381,997 | 4.44 | ||||||||||||
| Total interest-bearing liabilities | 7,211,847 | 1.42 | 8,626,031 | 2.01 | ||||||||||||
Noninterest-Bearing Liabilities and Shareholders’ Equity | ||||||||||||||||
| Noninterest-bearing demand | 1,435,216 | 1,277,461 | ||||||||||||||
| Other liabilities | 151,216 | 139,459 | ||||||||||||||
| Liabilities of discontinued operations | — | 259,837 | ||||||||||||||
| Shareholders’ equity | 983,005 | 1,280,574 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 9,781,284 | $ | 11,583,362 | ||||||||||||
Interest Spread | 3.25 | % | 2.86 | % | ||||||||||||
| Contribution of noninterest bearing sources of funds | 0.29 | 0.38 | ||||||||||||||
Net Interest Margin | 3.54 | % | 3.24 | % | ||||||||||||
15